CRC funded reports

1993-1994

The Council received reports from 11 completed research projects during the year
1993-94. A second report was received for a project, originally completed in
1990 (28/88), following further data collection and analysis. Summaries of
these reports are given below. These reports are held by the Australian
Institute of Criminology's JV Barry Library and are available on inter-library
loan. For full bibliographic information on any report, search the
Library's Catalogue.

The general prevention of drinking and driving

The products of this research, comprising various papers and journal articles,
have been bound in one volume under the project's title.

The overall purpose of the research was to explore the general preventive
effects of drink-drive law. The research developed the work of Homel (1986) on
general deterrence, and extended the international research of Snortum, Berger
and their colleagues to Australia. Since Australia has a relatively high rate of
alcohol consumption but also appears to have one of the most successful
drink-drive countermeasures in random breath testing (RBT), the extension of the
international research to Australia added a new dimension to our understanding
of the impact of drink-drive law in Australia. Comparisons were drawn
specifically with the USA and Norway.

The Australian survey, completed in June 1988 by ANOP, included face-to-face
interviews with 1,505 drivers over the age of 17, 1,133 of whom drank at least
once per year. The survey was carried out in rural and metropolitan areas of
NSW, Victoria, Queensland and Western Australia. At the time of the study
neither Queensland nor WA had RBT, although both had had vigorous "random
stopping programs". A prediction of the study, which was confirmed, was that NSW
respondents would report higher levels of compliance, be more deterred, and be
more condemning of drink-driving behaviour.

The interview schedule sought information in four areas: (a) behaviour - usual
alcohol consumption, details of alcohol consumed and travel arrangements on the
last occasion on which alcohol was consumed away from home, etc.; (b) exposure
to and perceptions of formal and informal sanctions - perceptions of the risk of
apprehension, moral beliefs about drinking and driving, perceived pressure from
friends, etc.; (c) knowledge - penalties and regulations, understanding of the
relationship between alcohol consumption and blood alcohol concentration (BAC);
and (d) population descriptors - age, sex, etc.

Striking differences in social norms, attitudes, and behaviours surrounding
drinking and driving were found in the three countries. Norway appeared to have
progressed farthest toward general prevention, whereas Australia relied more on
general deterrence, reflecting the impact of RBT in the most populous States.
Both general deterrence and general prevention appeared relatively weak in the
US.

Self-reported violations were considerably higher in Australia and the US than
in Norway. Australia reported more often than drivers in the other two countries
that they travelled by motor vehicle to a drinking occasion in the last two
weeks. This illustrates the structural pressures to drink and drive in Australia
and the relative lack of planning to use other methods of transport.

Norwegians and Australians had a better knowledge of the law than Americans.
Australians were less cynical than Americans about the operation of the law, and
reported more often than Americans that fear of arrest is the main reason for
exercising control. Australians had a stronger moral commitment to drink-driving
laws than Americans, but not as strong as Norwegians.

Comparing States of Australia, the analysis suggested that regardless of State,
many Australian drivers attempt to comply with drink-driving laws. An important
result was that many drinkers who normally drank very heavily moderated their
consumption on the last occasion on which they drank away from home, although a
majority of the heavier drinkers elected not to drive. This tends to confirm the
deterrent impact of RBT on heavy drinkers reported by Homel (1988).

Of immense theoretical and practical importance, nearly two-thirds of NSW young
drivers reported that when with friends they used police breath testing as an
excuse to limit their drinking, compared with only one-third of WA young
drivers. The overall evidence for the far greater intensity of police
enforcement of drink-driving laws in NSW compared with WA was overwhelming.
There is clear evidence that the intensive enforcement of RBT in NSW had
succeeded in changing the social environment of RBT in NSW, and that beliefs
about drinking and driving were beginning to change as a result of the
enforcement and publicity of the law.

Situational factors in the relationship between violence and the public use of alcohol

The products of this research, comprising various papers and journal articles,
have been bound in one volume under the project's title.

The purpose of this research was to document the nature of the "apparent
statistical association" between alcohol use and violence through an examination
of police incident reports and police recording practices; and to explore,
through detailed observations of clubs, pubs, and discos, ways in which the
association between alcohol consumption and violence may be produced in the
specific context of public drinking locations.

Observers visited 17 establishments in Sydney during 1989, making a total of 55
visits to 23 separate sites in the 17 establishments with a total observation
time in excess of 300 hours. The licensed premises selected for study included
some with a longstanding reputation for violence, as well as some with a
reputation for handling violence in an effective way. The method used was
qualitative and relatively unstructured, but was focused around features of the
management of the establishment and the physical and social environment. The key
question was: What aspects of management, security staff, the patrons, or the
drinking environment tend to promote or to prevent the occurrence of violence?

It was found that there is a substantial link between public drinking and
publicly occurring violence. This link is possibly far greater than previously
thought by researchers, especially in certain types of drinking locations. The
majority of incidents of violence occurring in and around drinking
establishments are not reported or recorded, and so official crime statistics
understate the true incidence of such offences.

Assaults taking place in and around drinking establishments are probably less
likely to be officially recorded by police because it is often difficult to
identify a victim. It seems likely that the majority of assaults occurring in
public places in NSW (and elsewhere) are alcohol-related. Much unreported
violence derives from specific premises that are "regularly violent". There are
at least several dozen such venues in the Sydney area and many have been
regularly violent for years. 30 assaults were observed during the observational
study. Police were called to three of these and took action in only one case.

The majority of victims are "legitimate" victims. Despite common beliefs about
pub "brawls", most attacks observed were not victim-precipitated. Attacks were
usually directed at male victims who were disadvantaged by their drunkenness,
youth, small size, or lack of companions. Most victims do not report attacks.

Contributing to the generation of violence in these premises are environmental
factors such as: boring atmosphere; lack of comfort - loud music, crowding,
limited seating, lack of ventilation; high levels of drunkenness; unavailability
of substantial food; and aggressive and unreasonable bouncers. One-quarter of
assaults observed were unwarranted attacks by bouncers on patrons. The
prominence of these factors suggests that licensees should no longer be able to
argue that regular violence is caused solely by individual patrons, and is not a
management responsibility.

Whatever the exact causal role of alcohol consumption in leading to violence,
there is no doubt that violence is a regular occurrence in many public drinking
establishments, and that the incidence of violence could be reduced by
modifications to management practices and to the drinking environment. The
liquor industry is aware of the problem, and is keen to work with researchers
and health professionals to improve the quality of life for patrons of licensed
premises.

Queensland Aboriginal Trust community initiatives in taking responsibility for social control

The context of this literature review and commentary is the loss of community
control of social and justice issues by Indigenous people, and the need to
restore it. The Discussion Paper provides an overview of literature relating to
components of the criminal justice system, and to aspects of justice which
affect Aboriginal and Torres Strait Islander people. Meetings and consultations
with indigenous people are reported on and cited in the commentaries. Some
critical analysis is included. The Discussion Paper makes reference to
Aboriginal community courts, non-judicial dispute resolution, community by-laws,
customary law, the court system, policing, custody and alternatives to custody,
and crime prevention. A position is taken and recommendations made in relation
to each of these areas.

Investigation of the incidence and analysis of cases of alleged violence reporting to the accident and emergency centre of St Vincent's hospital

This report primarily studies the victims of violence who presented as
"alleged assaults" to the Accident and Emergency Centres (AECs) of St
Vincent's in the six-month period from 25 December 1988 to 30 June 1989, and
also to Albury Base Hospital in NSW in the three months from December 1991 to
March 1992 and at two hospitals in Victoria - Wodonga District Hospital and
Wangaratta District Base Hospital in the six months from January 1992 to June
1992.

A comprehensive profile of these cases is revealed from the structured Victim
Survey that was the research tool. A further survey of the nursing staff at St
Vincent's Hospital demonstrates that staff are often required to cope with
violence against self and that guidelines and education are required to assist
them to deal effectively with this situation.

This study demonstrates that the victims of violence are a significant
population within the cases seen in busy accident and emergency departments both
in metropolitan and country hospitals. The report also gives strong indications
that violence is a prevalent problem for the whole community. This is a problem
which cannot be conveniently brushed aside as media sensationalism. Evidence of
this is revealed through a comparison of the "alleged assault" presentations
with the "worker's compensation, motor vehicle accidents, alcohol and drug
related" presentations at St Vincent's General Hospital. Additionally, these
figures are correlated with local and statewide police figures on violence and
related to the reporting of incidents to the police.

Data produced on cases of violence presenting to AECs are a valuable source of
additional information for police, policy analysts, and health planners.
Recommendations for the AEC include establishment of a computerised information
system in each AEC, education for all staff members in the recognition of
victims of violence, in handling the victims, their relatives and friends, and
in engendering an awareness of the support systems available for them.

Education is also required in handling and treating violence victims, in dealing
with violent and potentially violent situations and in the defusing of the
aggression generated. Further recommendations include education for the
prevention of violence commencing at the earliest possible age, involving the
community in projects which encourage service to and caring for others, projects
which emphasise the role of alcohol in contributing to violence, and in projects
which will provide alternative options for dealing with situations which would
usually generate violent reactions or behaviours.

Identification of biological material for forensic analysis, application of new DNA technology to an old problem

The results of this research are given in a summary report and a number of
journal articles which have been bound in one volume. The objectives of the
research were to (1) develop methods of detecting genetic variation at HLA Class
II genes for the purpose of individual identification in the context of forensic
investigations, with particular emphasis on the HLA DPB1 gene; (2) determine the
frequencies of these genetic variants in an Australian Caucasian sample; and (3)
identify and characterise any new genetic variants that might be detected in the
above sample or in the course of other work and develop routine methods for
detecting these.

The initial objectives of the project have all been achieved. When the project
began there were 19 HLA DPB1 alleles officially recognised by the World Health
Organization. A simple and accurate method of detecting these alleles was
developed. The method is based on amplification of the variable portion of the
DPB1 gene by the polymerase chain reaction (PCR) followed by restriction enzyme
digestion of the PCR product at sequence-specific restriction sites. The method,
now commonly referred to as PCR-restriction fragment polymorphism (RFLP)
analysis, has a number of advantages over alternative typing methods in terms of
accuracy, reliability, efficiency and sensitivity that are particularly relevant
in the context of forensic investigations. The reliability of the method has
been tested by applying it to the typing of cell lines prepared for the Tenth
International Histocompatibility Workshop, that had previously been typed by
other methods.

There are now 44 recognised HLS-DPB1 alleles and the typing method has been
modified and updated to enable all the new alleles to be detected. The
principles on which the typing method is based are explained. The HLA-DPB1
typing method has been applied to samples of unrelated individuals from ten
populations from the Asia-Pacific region and the frequencies of the different
alleles have been determined. In the process, a number of new alleles were
discovered.

HLA-DPB1 is one of the most polymorphic genes in the human genome and therefore
of great potential use in forensic DNA typing. With 44 known alleles it is, for
example, much more polymorphic than HLA-DQA1 at which only six alleles are
routinely detected in forensic typing. A reliable and efficient method of
detecting variation at this locus has now been developed. The method is based on
simple routine procedures and requires very little in the way of specialist
equipment or reagents. It is already proving useful in clinical applications and
should be equally useful in a forensic context.

This research was requested by the Crime Victims Advisory Committee, with a view
to establishing the needs of victims of crime in the Northern Territory. Data
were collected from Aboriginal and non-Aboriginal samples, using different
methodologies which took into account the cultural differences between the two
groups.

This study has clearly demonstrated that the victim is in a less powerful
situation following the crime, and they may be suffering physical, emotional,
social, and financial effects. Thus, the victim may benefit from knowledge
concerning both generic and specific services which are presented in an
organised and clear manner, as a matter of routine, rather than arising from an
expression of need, or by demonstration of inadequate coping.

The many similarities of victims across crime type, however, should not be used
as a reason to provide, either, all victims with support, or all victims' with
one type of support. It has been demonstrated that the historical assumption
that the needs of victims as being met by a general "payment" of recompense or
act of discipline by society and the state does not meet the needs of those
affected.

The results indicate that victims are seeking greater information, control, and
involvement with the police and criminal justice system. The types of
improvement that they have indicated, on the whole reflect realistic approaches
in an attempt to problem-solve the situation in which they have come to find
themselves. It is recognised that, following the crime being committed, the only
possible solution is to minimise its impact, and the impact of the criminal
justice system procedures.

The improvements to service provision that victims suggest reflect their
experiences of the system. Thus, they emphasised the practical and the provision
of information. Suggestions made were: (i) the provision of a counsellor who is
aware of issues of race and gender as they affect the victim; (ii) training of
police officers on the effects of crime on a victim and the victim's role; (iii)
a central contact officer responsible for each victim; and (iv) recognition of
the victim/witness role by head office and local branches, as well as greater
police community involvement.

Suggestions were also made for improvements for the court system: (i) minimising
time delays and numbers of adjournments; (ii) more appropriate sentencing, a
formalised bail process which includes procedural notification to the victim of
relevant decisions; and (iii) greater support for emotional/counselling and a
protective environment for the victim.

In addition to improvement in the functioning of the existing criminal justice
system structure, victims of crime involved in this study have also made
suggestions relating to new services for victims. These are services primarily
designed to reduce the impact of the initial experience of the crime.

A preliminary investigation into perceptions of Australian criminal, civil and family law prevalent among the Indo-Chinese settled in Australia

This study encompasses three communities - Cambodian, Lao and Vietnamese - of
new settlers in Australia. Interviews were undertaken with members of the
communities in Sydney, Melbourne and Brisbane as well as with community workers,
solicitors and police.

The main body of this study focuses first on the low crime profile of these new
settlers in Australia. Despite the trauma of internment in refugee camps, the
Indochinese in Australia present a reassuring image of quiet and thriving
settlers. Indochinese people are less likely to be imprisoned, and are
under-represented in the crime figures.

An important issue remains with the generally negative perception that
Indochinese people have of the police in Australia. The main reason for this is
previous negative experience in their home countries and refugee camps, as well
as the situation in their adopted country. This situation threatens to offset
efforts of Australia's police to create an atmosphere of confidence and
cooperation. Confidence-building measures are needed to help create a working
relationship between police and members of the Indochinese communities.

Many problems derive from Indochinese people attempting to live as they did in
their home country, which may not be acceptable under the Australian legal
system. As the authority of traditional leadership and networks decays, there is
a reduction of social cohesion. Although the new social environment offers the
Indochinese rewarding opportunities such as increased independence for women and
improved education for the children, adverse effects have included increasing
violence in the family, soaring divorce rates, and increasing numbers of youth
at risk. Traditional customs disappear with the second generation of
Indochinese, who are more likely to commit crimes as parents lose control over
them.

The research argues for reinforcing traditional leadership and values among
Indochinese settlers in Australia in so far as this enhances law and order and
contributes to enriching multiculturalism. In this regard, a more
self-restrained attitude in some quarters of the mass media would be
appropriate.

Alcohol use among Aboriginal youth and its relationship to delinquent behaviour

The aim of this study was to examine the nature of the relationship between
substance abuse and juvenile delinquency among Aboriginal youth. The purpose of
the study was to aid the Sobriety Group in the development of a facility that
would help deal with Aboriginal substance abuse and juvenile offending. By
examining the nature of the relationship between drug use and delinquency it was
believed that more effective programs could be developed for dealing with the
problem.

A questionnaire was administered to Aboriginal and non-Aboriginal school
students between the ages of 10 and 18 years in order to determine whether there
is a relationship between drinking, drug taking, and delinquent behaviour.
Interviews were conducted with members of the police force and with Aboriginal
youths from both recreational and correctional facilities in an attempt to
better understand the nature of the relationship as it applies specifically to
Aboriginal youths.

The major findings of the school study were that: fewer Aboriginal students
reported drinking alcohol than is generally expected; alcohol use increased with
age although less than half of the total sample of Aboriginal students indicated
that they drink alcohol; non-Aboriginal students reported drinking more often
than Aboriginal students; marijuana use was found to be very extensive in both
groups but the use of "hard" drugs was found to be fairly rare; Aboriginal
students were involved in serious delinquent activities and acts of
interpersonal aggression more often than non-Aboriginal students; and alcohol
use appeared to be closely related to delinquency for Aboriginal students in
particular, while marijuana use was found to be related to involvement in
delinquent activities for both groups of students.

Results from the interviews also suggested that substance abuse is related to
Aboriginal juvenile offending in the following ways.

Many youths who commit crimes use alcohol and other drugs quite extensively;
many youths reported that they commit crimes when they are under the influence
of certain substances, and they often commit crimes in order to obtain alcohol
and other drugs. Substance abuse and delinquency appear to be related in that
they both seem to arise from common "causes". Peer group pressure and boredom
were the primary reasons given by the youths when they were asked to indicate
why they use drugs and why they commit crimes.

Although the results do not suggest that Aboriginal youths drink alcohol or use
other drugs more often than non-Aboriginal youths, they do suggest that
substance abuse among Aboriginal youths is closely related to juvenile
offending. The fact that the Aboriginal students were found to be involved in
serious delinquent activities and acts of aggression against other people more
often than non-Aboriginal students, and that alcohol use was found to be closely
associated with juvenile delinquency for Aboriginal students but not for those
who were non-Aboriginal, suggests that programs which deal with substance abuse
among young Aboriginal people can do much in reducing the rate of juvenile
crime.

The report provides a detailed discussion of the findings and of the complex
nature of the relationship between substance abuse in juvenile offending. It
also discusses the role that negative attitudes towards school and the police
may play in the development of delinquent behaviour patterns. Suggestions are
then made as to how these findings can be used in order to make programs that
deal with substance abuse and juvenile delinquency more effective when dealing
with Aboriginal youths.

The outputs from this project were: Corporate Crime and Corporations Law Enforcement Strategies in Australia,
Discussion Paper 1/1993 by Professor Roman Tomasic, Centre for National
Corporate Law Research, School of Law, University of Canberra (346.0660994 p
TOM);. The following three papers have been bound in one volume: Sanctioning
Corporate Crime and Misconduct: Beyond Draconian and Decriminalization Solutions
by Roman Tomasic, 1992 National Corporate Law Teachers' Workshop, Centre for
National Corporate Law Research, University of Canberra, also published in
Australian Journal of Corporate Law, vol. 2, no. 1, 1992, pp. 82-114. Corporate
Crime in a Civil Law Culture by R. Tomasic, Current Issues in Criminal Justice,
vol. 5, 1994, pp. 244-55. Complex Corporate Trials and Corporate Social Control
in Australia by R. Tomasic, unpublished paper for the Panel on Long-term Trends
in Litigation, Research Committee on the Sociology of Law, ISA World Congress,
Bielefeld, Germany, 1994 (364.0660994 fp TOM). Corporations Law Enforcement
Strategies in Australia: The Influence of Professional, Corporate and
Bureaucratic Cultures by R. Tomasic, Australian Journal of Corporate Law, vol.
3, 1993, pp. 192-229. Corporate Crime by R. Tomasic, in The Australian Criminal
Justice System: The Mid 1990s, eds D. Chappell and P. Wilson, Butterworths,
Sydney, 1994, pp. 253-69. Corporate Crime, Governance and Corporate Social
Control by R. Tomasic, unpublished paper delivered at the AIC Crimes Against
Business Conference, Melbourne 1994.

There have been major official and academic debates in Australia concerning
appropriate methods to be adopted in sanctioning corporate and white collar
crime. This project sought to address this debate by focusing upon the attitudes
of key corporate law observers and actors to determine what kinds of strategies
would be likely to be effective here. Field work for this project was conducted
by the author in 1992 and involved interviews with key observers in five
Australian capital cities. These interviewees comprised leading members of the
judiciary, prosecutors, senior corporate regulators, corporate lawyers,
liquidators and leading barristers.

The project found that although there are strong policy reasons for seeking to
treat corporate and white collar crime in similar ways to other types of
criminality, often there may be far more effective means of achieving corporate
accountability and control than the resort to major criminal law trials
involving such offenders. The dominance of what has been described as a civil
law culture in regard to corporate conduct, makes the acceptance of
criminalising corporate misconduct somewhat problematic. The project does not
suggest that criminal prosecutions are inappropriate, but rather, that they
should be strictly limited and that greater use should instead be made of civil
recovery proceedings, administrative procedures like the disqualification of
directors and corporate internal reform orders.

The definition and prevalence of corporate and white collar crime are very much
affected by prevailing business attitudes in regard to various practices. All
too often when corporate crime has been discussed in Australia, generalisations
are made from narrow fact situations or from particular types of corporate
crime. This is unfortunate as it does not serve to refine a debate which is of
much public policy significance and in need of broader perspectives of the
nature of the problem. It also means that from time to time the debate has been
allowed to descend into overly emotional responses. In one paper from this
project it was argued that in view of the considerable difficulties of
definition surrounding the problem of corporate crime, it might be useful to
rethink our attitude to corporate crime and start with a broader four-fold
typology of corporate criminality. In the typology of corporate crime it was
suggested that it was possible to identify at least four types of corporate
criminality, as follows: corporate crime committed by a corporation itself for
the benefit of that corporation; corporate crime committed by the agents or
controllers of a corporation for the benefit of that corporation; corporate
crime committed by a corporation itself against the interests of another
corporation; and corporate crime committed by the agents or controllers of a
corporation against the interests of the corporation.

Different responses to corporate criminality are desirable depending upon the
nature of the crime which has occurred. As the research project has shown, the
recent legal debate on corporate crime has tended to polarise around the virtues
of criminal or of a civil approach to such conduct. It is clear that it is
necessary to be far more innovative in dealing with the problems of compliance
and social control in respect to the actions of corporations and their agents
and officers because traditional criminal law sanctions are often too late or
too difficult to use to have any useful effect. They are often too late in that
by the time that a case comes to court it is often the case that assets or funds
have been dissipated or removed from the easy reach of the courts or those who
have been harmed, such as creditors.

Whilst a custodial sentence may well be appropriate for a corporate criminal, it
is also necessary to adopt an approach which takes into account the practical
realities of corporate crime prosecutions, especially where they involve
respected and powerful members of the community, often with no prior criminal
record and able to draw out complex cases over a long period of time. Dealing
with corporate criminality becomes far more difficult if the principal response
is a protracted major trial or prosecution. With some corporate crimes, it is
often too late to salvage a situation by the time that such a trial takes place.
It may therefore be necessary to adopt other strategies as the principal
response to corporate crime. Whilst this is not to suggest that corporate
criminal prosecutions should be abandoned, it should be recognised that there
are more cost effective and timely means of dealing with corporate crime. One of
these is a greater reliance upon a regulatory response to minor matters, such as
the use of fines and administrative mechanisms. Probably the most effective
mechanism for dealing with corporate crime is to attach the roots of such
conduct within the corporation itself. In this regard, more effective governance
structures, greater disclosure to shareholders and investors and improved
mechanisms of accountability within the corporation are crucial.

The relationship between critical development experiences during childhood and pubescence, hostility and negative evaluation and adult sexual interest in and abuse of children

This study was conducted with an experimental and control group of adult male
inmates held in prisons throughout South East Queensland, totalling 100
offenders. Data from the study revealed a series of characteristics attributable
to the perpetrators of sexual offences against children. These can be
categorised into factors associated with their own sexual molestation, with more
general socialisation factors, biological factors (such as physiological
reactivity and physical health), cognitive and affective factors, and
behavioural factors; many of which overlap with one another.

Perusal of the features relating to child molesting in adulthood indicates that
these offenders have typically failed to develop the capacity to implement
effective emotional and sexual relationships with other adults. The
developmental experiences reported by these subjects have seen them socially and
emotionally isolated. They were typically left feeling socially inept, anxious,
lonely, frustrated (and typically passively aggressive as a consequence of not
knowing how to overcome their frustration) and unable to form intimate
relationships by prosocial means. Fear of negative evaluation and rejection, and
intra-punitive and extra-punitive hostility were also elements which featured
highly in the disposition of the subjects.

Investigation of the impact of sexual molestation upon the sex offenders showed
that generally, although the sex offenders were uniformly young when molested,
those who were in the age range eight to 11 years experienced greater impact
than those who were younger.

The research strongly supports the literature, which indicates that the
experience of sexual molestation, in conjunction with other experiences,
influences later sexually inappropriate behaviour by those same individuals as
adults. However, researchers and clinicians remain divided on whether to regard
the effects of sexual molestation as learned behaviours, or as symptoms of
internal "dynamics".

This study demonstrates empirical support within the Australian context for the
contention that the variables associated with child molesters exist on a
continuum. It provides support for earlier findings that there is no single set
of characteristics which are unique to child molesters. It also indicates that
sexual urge is not the primary reason for sexual assault and that child
molestation can be in part related to unresolved life issues.

From a cultural perspective, whilst many of the results replicate the overseas
experience, the uniqueness and individuality of the Australian culture and
history suggest that there are strongly entrenched values, beliefs and
accompanying behaviours which directly and indirectly (and under a network of
specific circumstances influence the vulnerable to behave in this way.

Reports resulting from this project are listed below and were all published by
the Program on Nonprofit Organisations, Queensland University of Technology. The
National Safety Council Fraud - Regulatory Slip or Systemic Regulatory Failure?
by Myles McGregor-Lowndes (364.1630994 fp McG); The Challenge from Within.
Organizational Commitment in Voluntary Human Service Organizations, Working
Paper No. 15 by Catherine McDonald (364.1630994 fp McD); Board Members'
Involvement in Nonprofit Governance, Working Paper No. 16 by Catherine McDonald
(364.1630994 fp McD); Gifts, The Law and Functional Rationalism, Working Paper
No. 17 by Myles McGregor-Lowndes (364.1630994 fp McG); Community Services
Development: A New Approach to Government / Non-Government Sector Relations,
Working Paper No. 18 by Jan Williams (364.1630994 fp WIL); An Analysis of the
Differences in Audit Processes used in the Audit of Nonprofit and Profit
Organisations, Working Paper No. 19, by Renee Radich (364.1630994 fp RAD); and
The Application of Financial Ratios in Analysing Nonprofit Organisations,
Working Paper No. 20 by Ros Kent (364.1630994 fp KEN).

This project was initiated after the financial collapse of the Victorian
National Safety Council, a nonprofit organisation, primarily due to fraud by its
executive director. The project adopted a multi-disciplinary approach to
identifying and assessing issues pertaining to fraud and its prevention in
nonprofit organisations.

The first part of the project involved a case study of the financial collapse of
the National Safety Council with material drawn from interviews, court
proceedings and Corporate Affairs Commission documents. This study found that
the fraud was facilitated by an inappropriate legislative regime for the
particular organisation, unresponsive and uncoordinated scrutiny by regulatory
officials and an inattentive board of management and auditors.

To follow up these results from the case study, three further studies were
undertaken on Queensland nonprofit organisations. The first study sought to
ascertain the current status and ability of nonprofit boards to fulfil their
governance function. The results indicated that the management of boards
generally lack appropriate formal qualifications, spend little time or effort on
crucial management functions and rely heavily on executive management. The study
went on to recommend prescriptive indications for maximising the governance
capacity of nonprofit boards and organisations.

The second study involved an assessment of the audit process in nonprofit
organisations compared to profit organisations. The research involved the
collection of accounting information for 22 Queensland charities. The auditors
of these organisations were requested to complete questionnaires addressing
their overall approach to the audit of nonprofit organisations. For 11 of these
nonprofit organisations, a matched (by annual revenue) profit organisation
signed by the same auditor was compared using attributes of the audit process.
Attributes tested were the use of engagement and management letters,
materiality, components of audit risk, extent of compliance testing, staffing
levels, and time spent. The results indicate that parts of the audit process
used are statistically different for nonprofit and profit organisations. These
differences should be taken into account by legislators in drafting of new
legislation and by the auditing profession in evaluating audit risk.

The third study examined the use of financial ratios for nonprofit organisations
which could be used as benchmarks as to financial performance. This would assist
regulators in identifying financial patterns which require further investigation
for possible fraud or financial trouble.

The study examined ratios of a group of nonprofit organisations and assessed the
applicability of the traditional profit-based ratios to nonprofit organisations.
Financial statements of a sample of charities registered in Queensland are
analysed. The traditional profitability, liquidity and financial stability
ratios were analysed and calculated wherever practicable and compared to the
typical benchmarks used in profit analysis. The traditional ratios and their
benchmarks (used in the profit sector) calculated from the financial statements
prepared within the present reporting framework are largely inappropriate to the
nonprofit sector. Alternative benchmarks useful for the nonprofit sector are
suggested. In summary, the implications of this research are as follows.

Nonprofit organisations in Queensland currently appear to be poorly placed to
manage increasingly complex management and accountability requirements.

The predictive models of high levels of involvement in board management
processes indicate that if organisations wish to involve their boards, they must
either engage in specific recruitment drives, or, instigate deliberate
strategies aimed at gradually increasing and broadening board involvement.

State and Federal instrumentalities which make grants to nonprofit organisations
for the delivery of welfare services need to seriously address the developmental
and educative needs of nonprofit boards. This is particularly urgent if they
continue to pursue policies which require service consumers and minority group
members participation in nonprofit governance.

Auditors engaging in the financial scrutiny of nonprofit organisations behave
towards nonprofits as if they are for-profit organisations. In effect, they fail
to appreciate the differences in management engagement and capacity, thus
leaving the organisations relatively exposed.

Some standard auditing practices and benchmarks do not reflect the conditions of
nonprofit organisations, thus giving misleading results. The standard ratios
used by the accounting profession to assess organisational viability are
themselves quite limited in their capacity to reflect the true state of the
nonprofit organisation.

The National Safety Council fraud is not a mere regulatory slip but evidence of
the "worst case" result from systemically flawed legislation and regulatory
environment. The cloning of certain business regulatory templates is
inappropriate for the control of fraud and socially undesirable practices in
nonprofit organisations.

In conclusion, the regulatory and management regimes and practices surrounding
nonprofit organisation need to be adapted to their peculiar circumstances,
particularly if they are to continue as a major medium for the delivery of
social goods on behalf of the state and society.